What a Business Owner Can Contribute to a DIP

A Long-term Investment Product (DIP) falls under retirement savings products. From the employer’s point of view, it belongs to the same category as supplementary pension savings, pension insurance, or long-term care insurance.

For 2025, employers can contribute up to a total of CZK 50,000 per year to these products for each employee. Up to this limit, the contribution is exempt from tax and social and health insurance on the employee’s side, and it is also a tax-deductible expense for the company.

The result is savings on both sides: the employer reduces the corporate income tax base, and the employee receives the contribution tax-free and without social or health insurance deductions.

Salary vs. DIP Contribution

Increasing gross salary is more expensive for the company, because on top of the raise it must add 24.8% for social insurance and 9% for health insurance. In total, every additional CZK 1,000 costs the company roughly CZK 1,338. After the employee’s own deductions and tax, the employee sees about CZK 884 net.

If the company instead sends CZK 1,000 as a DIP contribution (within the legal limit), the company’s cost is exactly CZK 1,000 and the employee receives the full amount. The contribution is not subject to tax or insurance.

For the same budget, the company provides significantly higher real value to the employee — or can achieve the same effect at a lower cost compared to raising gross salary.

How a DIP Contribution Reduces the Company’s Tax Base

Let’s illustrate with a model example: a company has a pre-tax profit of CZK 2,000,000 and would normally pay 21% tax amounting to CZK 420,000.

If the company provides employees with retirement savings contributions totaling CZK 200,000, it reduces its tax base to CZK 1,800,000. The tax then drops to CZK 378,000. The company saves CZK 42,000 in taxes and employees receive CZK 200,000 to their DIP accounts tax- and insurance-free.

The actual cost to the company (after the tax savings) is therefore approximately CZK 158,000.

How a Business Owner Can Contribute to Their Own DIP

If the business owner is also an employee of the company (e.g., through an employment contract or managing director remuneration), the same rules apply as for any other employee.

Company contributions:
The company may contribute up to CZK 50,000 per year within the retirement savings product limit. This contribution is exempt from tax and insurance for the owner, and it is tax-deductible for the company.

Personal deposits:
The owner may also contribute personal funds as a private individual. These contributions can be deducted from the owner’s personal tax base up to CZK 48,000 per year. With a 15% tax rate, this means savings of up to CZK 7,200 annually.

Thanks to combining both methods, the company reduces its tax base and the owner receives tax-exempt company contributions plus a personal tax deduction.

It is essential, however, to have a real employment relationship, not a formal structure created solely for benefits — this should always be consulted with an accountant or tax advisor.

Example:
The owner contributes CZK 4,000 monthly as a private individual, and the company adds CZK 4,100 as a benefit. The total monthly investment is CZK 8,100. At an average return of 8% annually over 20 years, the account grows from CZK 1,944,000 deposited to approximately CZK 4,771,065.

The owner also deducts CZK 48,000 from their tax base each year (saving CZK 7,200), and invests this tax refund at the end of the year. If these amounts grow at the same rate, the total DIP value after 20 years reaches approximately CZK 5,111,706.

How to Use DIP to Motivate Employees

A DIP can serve as a classic benefit (“the company contributes X CZK monthly to everyone”), but also as an effective tool for motivation and retention.

Matching:
The company may set up a model where the employee contributes an amount and the company matches it — for example 50% or 100%. The employee is clearly motivated to save, and the company gains a benefit with a well-controllable limit and long-term impact.

Loyalty benefit:
The contribution amount may be tied to the length of employment, job position, or performance. This clearly signals: the longer you stay with us, the more we invest in your future.

Want to see how this model would work in your company? Request a tailored calculation or consultation and find out how a DIP can impact your taxes, costs, and employee motivation.